• The International Labour Organization is bracing for a “significantly worse” drop in Q4 working hours than forecast.
  • Nations must collaborate to help address huge stimulus gap in poorer countries, it says.
  • Inactivity is rising faster than unemployment and needs policy attention.

There is “scant hope” of a strong recovery in the labour market this year, the International Labour Organization (ILO) is warning in its latest analysis of COVID-19’s impact on the world of work.

The United Nations agency, which has 187 member states, expects to see working hour losses equivalent to 245 million full-time equivalent (FTE) jobs in the fourth quarter of this year, up from its previous estimate of 140 million FTE jobs.

Labour income globally dropped by 10.7%, or $3.5 trillion, in the first three quarters of 2020, compared with the same period in 2019, finds the sixth edition of the ILO Monitor: COVID-19 and the world of work. Here are some key takeaways.

1. Stimulus packages don’t go far enough

Working hours 2020 covid-19 fiscal stimulus
Low and middle-income countries are facing a growing stimulus gap.
Image: ILO

In low and lower-middle-income countries, there is now a $982 billion gap between the value of fiscal stimulus packages and the labour market damage inflicted by the pandemic.

The ILO is calling for policy interventions to be made on a scale which corresponds to the magnitude of labour market disruptions.

“Greater international solidarity” – including debt relief and official development assistance – will be key to tackling this gap. The ILO is also urging governments to ensure that fiscal measures announced are “delivered rapidly and efficiently”.

2. Inactivity is rising faster than unemployment

Unemployment increases employment decline
Inactivity is rising faster than unemployment except in the US and Canada.
Image: ILO

Inactivity – those not in work or seeking it – is rising more steeply than unemployment in every country apart from Canada and the United States. This is worrying and needs policy attention.

“Focusing on changes in unemployment alone can be misleading,” the ILO warns.

“Experience from earlier crises shows that activating inactive people is even harder than re-employing the unemployed, so higher inactivity rates are likely to make the job recovery more difficult.”

Younger and older people – who have been hit particularly hard by the COVID‑19 crisis – are especially at risk because these two groups normally have a higher risk of becoming inactive.

3. Vulnerable and hard-hit groups are most at risk

Labour income loss
Groups including women and informal workers will need particular support.
Image: ILO

The ILO says it is “critical” that policy measures should provide the “fullest possible support” for vulnerable and hard-hit groups, including migrants, women, young people and informal workers.

Latest data confirm that employment losses are larger for women than for men.

“The large increase in inactivity means policymakers will need to tailor policy responses,” the ILO says. “Including continued income support and efforts to assist with workers’ return to employment.”

It wants to avoid large-scale and long-term marginalization from labour markets – ensuring that no-one is left behind.

4. Balancing health, economic and social policy will be key

Work lockdown COVID-19 health
Lockdowns are more relaxed in lower-income countries.
Image: ILO

The strictest form of lockdown – with required closures for all but essential workplaces across the entire economy or in targeted areas – is still in place for around 70% of workers in upper-middle-income countries.

Low-income countries, in contrast, have “relaxed considerably” earlier strict measures, despite increasing numbers of COVID-19 cases.

Getting the right balance and timing of health, economic and social policy continues to be crucial, the ILO says. It warns: “Ill-advised or premature loosening of precautionary health measures creates a risk of prolonging the pandemic and thereby worsening its labour market impact.”

5. We need to keep talking

Working hours COVID-19 coronavirus
As the pandemic continues, governments, employers and workers need to keep talking.
Image: ILO

“Social dialogue” strongly characterized the early response to the pandemic and needs to continue, the ILO says.

It defines social dialogue as formal or informal talks between governments, employers and workers on issues of common interest relating to economic and social policy. This is particularly important as the pandemic persists and challenges become more complex.

The ILO says policymakers will need to maintain support to employment and incomes over the coming months and well into 2021.

The World Economic Forum’s virtual Jobs Reset Summit on 20 – 23 October will bring together leaders from business, government, civil society, media and the broader public to shape a new agenda for growth, jobs, skills and equity.

The four-day programme will look at rewiring the global economy for future growth and investing in work, wages and job creation, while exploring how economic and jobs disruption might be leveraged to create greater social justice and opportunity for all.